Michael Indelicato and Rosanna Rita Indelicato T/As Michael Indelicato Homes v World Phone Card Pty Ltd
[2019] WASC 323
•9 SEPTEMBER 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: MICHAEL INDELICATO AND ROSANNA RITA INDELICATO T/AS MICHAEL INDELICATO HOMES -v- WORLD PHONE CARD PTY LTD [2019] WASC 323
CORAM: ALLANSON J
HEARD: ON THE PAPERS
DELIVERED : 9 SEPTEMBER 2019
FILE NO/S: CIV 1681 of 2019
BETWEEN: MICHAEL INDELICATO AND ROSANNA RITA INDELICATO T/AS MICHAEL INDELICATO HOMES
Applicant
AND
WORLD PHONE CARD PTY LTD
First Respondent
HARMANJIT SINGH PABLA
Second Respondent
THE REGISTRAR OF TITLES
Third Respondent
Catchwords:
Costs - Where plaintiffs brought proceedings to extend operation of caveat - Where underlying dispute subject of proceedings in District Court - Where defendants offered and plaintiffs accepted alternative security to enable dealings on title - Whether court should order costs in favour of either party
Legislation:
Construction Contracts Act 2004 (WA)
Transfer of Land Act 1893 (WA), s 138B, s 138C
Result:
No order as to costs
Category: B
Representation:
Counsel:
| Applicant | : | No appearance |
| First Respondent | : | No appearance |
| Second Respondent | : | No appearance |
| Third Respondent | : | No appearance |
Solicitors:
| Applicant | : | Vogt Graham Lawyers |
| First Respondent | : | Mills Oakley |
| Second Respondent | : | Mills Oakley |
| Third Respondent | : | No appearance |
Case(s) referred to in decision(s):
Lafferty v Waterton [2016] WASCA 183
ALLANSON J:
The plaintiffs commenced proceedings in this court by originating summons, filed 16 April 2019, for orders under s 138C of the Transfer of Land Act 1893 (WA), extending the operation of a caveat.
The matter was brought before me urgently on the basis that the caveat would lapse at midnight on 23 April 2019.
Factual background
The plaintiffs trade as registered builders, Michael Indelicato Homes.
On 1 December 2014, the plaintiffs entered into a building contract in the form of the HIA Medium Works Commercial Contract Conditions (the agreement). The plaintiffs were to construct eight double story apartments on land in Canning Vale, Western Australia (the land).
The first and second defendants were the other party, referred to in the agreement as the Client. I will refer to them collectively as the defendants. The third defendant (the Registrar of Titles) was only formally a party.
On 31 October 2018, the plaintiffs sent a payment claim to the defendants. The plaintiffs say that the defendants have failed or refused to pay the payment claim. The claim was in the amount of $291,005.73.
On or about 15 November 2018, the plaintiffs caused a caveat to be lodged on the title to the land. The caveat was an absolute caveat, forbidding the registration of any instrument affecting the estate or interest in the title.
On 18 February 2019, the plaintiffs applied for an adjudication under the Construction Contracts Act 2004 (WA). On 22 March 2019, they received the adjudicator's determination; there was no adjudication in their favour.
On 2 April 2019, the respondent applied to the Registrar of Titles to issue a notice under s138B of the Transfer of Land Act. On 3 April 2019, the Registrar sent notice to the plaintiffs under s 138B. The effect of the notice was that the caveat would lapse on 26 April 2019 unless the plaintiffs obtained an order of this court extending its operation.
The plaintiffs applied to extend the operation of the caveat. They had not then commenced proceedings against the defendants arising from the non-payment of the payment claim.
The caveat stated the interest claimed by the plaintiffs as 'an interest as chargee' by virtue of the agreement. That is, the interest they claimed was an equitable charge. The plaintiffs supported the caveat by reference to cl 3.6 of the agreement which provided:
If no security is required from or provided by the Client, the Client charges its interest in the site with the due payment to the Builder of all moneys that may become payable to the Builder arising out of the subject matter of the contract.
At the first hearing, the plaintiffs sought to amend the caveat from an absolute caveat to one making registration of any instrument affecting their interest subject to their claim.
At the first hearing before me on 18 April 2019, I directed that the caveat be amended from one forbidding the registration of any dealing absolutely to one requiring any dealing to be subject to the plaintiffs' claim. I extended the operation of the caveat until further order of the court, but required the plaintiffs to commence their District Court proceedings by 24 May 2019. The matter was adjourned to a special appointment on 19 June 2019.
On 23 May 2019, the plaintiffs commenced proceedings against the defendants in the District Court. The writ seeks damages of $157,339.84, substantially less than the amount in the payment claim.
The defendants filed submissions and evidence for the special appointment. In substance, they submitted that the caveat was defective in form, and that the plaintiffs had no caveatable interest in the land. They submitted that the plaintiffs' claim was weak and gave notice of a substantial counterclaim.
The defendants further submitted that the caveat over the whole of the land prevented them from obtaining individual strata titles for the eight apartments on the land. They submitted that the balance of convenience favoured its removal.
Importantly, the defendants offered alternative security.
On 19 June 2019, the matter was adjourned to 1 July 2019, in part to enable the plaintiffs to file further evidence relating to the form of the caveat.
There was a further adjournment on 1 July 2019, for which a costs order was made in favour of the plaintiffs.
The parties were then able to agree an alternative form of security, with the defendants paying the sum of $101,051.59 into a controlled monies account operated by the defendants' solicitors and the plaintiffs agreeing to the removal of the caveat, and to a restraint preventing them from lodging any further caveat over the land. The alternative security was in the form that had earlier been proposed by the defendants, but in a substantially higher amount.
The remaining issue is the costs of the proceedings in this court, where the substantive proceedings regarding the liability (if any) of the defendants to the plaintiffs are in the District Court.
The merits of the caveat proceedings
The two broad issues on the application to extend the caveat were: first, whether the plaintiffs' claim in respect of their interest in the land 'has or may have substance'; second, whether the balance of convenience favoured the retention of the caveat.
The requirement that a plaintiffs' claim in respect of the estate or interest in land 'has or may have substance' required the plaintiffs to show that there is a serious question to be tried, or that they have a prima facie case.
This court is not in a position to make any assessment of the merits of the plaintiffs' claim for money payable under the contract. But the plaintiffs had made a payment claim under the agreement, which remained unpaid. They had an arguable claim for an interest in the land, pursuant to cl 3.6 of the agreement, which they were entitled to protect by lodging a caveat. Subject to the balance of convenience, they should be able to maintain their security until it is finally determined whether or not any moneys are owing to them and secured by the charge. Subject to the question of balance of convenience, the plaintiffs were entitled to maintain the caveat (once amended) for such time as was necessary to determine the question of liability under the contract.
The question of balance of convenience was, perhaps, the more difficult question because of the effect of the caveat over the whole of the land on the ability of the defendants to register separate strata titles.
The alternative security agreed between the parties made it unnecessary to determine that question.
Costs
Proceedings under s 138C are often similar to proceedings for interlocutory relief: the court does not finally decide the rights between the parties but only whether the caveator's interest should be preserved pending the final determination. It is common, although not inevitable, that the costs follow the result in the underlying proceedings.
In this case, the defendants' liability to the plaintiffs will be determined in the District Court.
The second question, whether, on the facts of this case, cl 3.6 of the agreement was effective in charging the land with that liability, may never be determined because alternative security has been put in place.
In effect, the dispute in this court has been resolved by the parties' agreement to alternative security without the need for consideration of the merits. The general principles regarding costs, where a matter has not been determined on its merits, were stated by the Court of Appeal in Lafferty v Waterton [2016] WASCA 183:
16.It is trite law that the court has a very wide discretion as to costs, limited only by the requirement that it be exercised judicially. The general rule is that the successful party is entitled to an order for its costs. That is because ordinarily fairness requires that a party who has unjustifiably brought the other party before the court, or who has unjustifiably resisted a claim to which the other party is entitled, should have to meet the costs that have been incurred by the other party.
17.The general rule, however, is based upon the identification of the successful party by a hearing on the merits. In cases where the matter is settled without a determination on the merits the court is deprived of the factor that will usually determine how the discretion as to costs is to be exercised. As McHugh J pointed out in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, 624, the court cannot try a hypothetical action between the parties and burden the parties with the costs which by their settlement they had avoided.
18.There may, however, be cases where despite the lack of a final determination the court is able to find that the settlement was in fact simply a capitulation by one party in the face of probable defeat, where an order for costs may be appropriate. There may also be cases where the court is able to conclude that one party has acted so unreasonably that the other party should be entitled to an order for costs. But where it appears that both parties have acted reasonably in commencing and defending the proceedings, and their conduct continued to be reasonable until the proceedings came to an end, the proper exercise of the costs discretion will usually mean that the court will make no order as to costs: Ex parte Lai Qin, 625.
In my opinion, this is not an occasion where the court can or should delve further into the dispute. I am not satisfied that the plaintiffs acted unreasonably by seeking to preserve their security. Nor have the defendants acted unreasonably in resorting to an administrative procedure, specifically provided by the Transfer of Land Act, to enable them to register dealings against their title. Further,
(1)it was only on 17 April 2019, the day before the hearing, that the plaintiffs apparently recognised that an absolute caveat was not appropriate in the circumstances and that an amendment of the caveat was necessary were it to remain in place;
(2)the plaintiffs needed to file further evidence to explain the discrepancy between the name on the caveat (Michele Indelicato) and the name used by Mr Indelicato (Michael) in other documents including the relevant contract;
(3)at the time the defendants applied to have the caveat removed, the plaintiffs had not commenced any proceedings in relation to their claim, following the failure of the adjudication application;
(4)in their submissions filed 5 June 2019, the defendants proposed alternative security, although in the amount less than that ultimately agreed, which enabled an appropriate balance to be maintained between the plaintiffs' claim and the prejudice suffered by the defendants from the lodging of the caveat.
I have considered whether the proper order is that the costs of the caveat proceedings should follow the result in the District Court on the basis that justice favours the indemnification (at least in part) of the party who ultimately succeeds. But in these separate proceedings, where each party has acted reasonably to preserve their own interests, and no decision has been made as to the merits of the plaintiffs' claim to a caveatable interest, the proper order is that there be no order as to costs. That is, of course, subject to the limited order already made regarding the costs thrown away on the adjournment of the hearing on 1 July 2019.
It is unnecessary to consider the further question of whether any special order should be made.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CG
Associate to the Honourable Justice Allanson9 SEPTEMBER 2019
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